The present invention relates to a method and corresponding software program for handling vehicle acquisitions.
In the traditional mode of vehicle acquisition, many individual transactions must be performed in order to complete a transaction, such as pre-qualification for financing, organization of value-added products, insurance and more. Each of these transactions must be handled one at a time, with qualification and/or applicability evaluated for each by a retailer and each party involved. Financing must be qualified, applied for, negotiated, and finalized. Insurance services must be determined for each transaction. Value-added services, such as warranties, must be determined on a case-by-case basis. Trades, payoffs and purchases are handled separately. In short, each aspect of the vehicle acquisition transaction is handled individually as part of a single acquisition, making the overall experience time consuming, complex and prone to error, both because of retailer inexperience and high turnover in the retail vehicle industry, as well as the typical complications that arise from such an involved transaction.
Further, from a service and product provider's standpoint, the system is fraught with complication as well. Retailers must be trained on many different systems, which not only amount to difficulty from a transactional standpoint, but can have legal ramifications as well. For example, serious repercussions can arise should consumer credit laws not be fully complied with. Additionally, retailers generally do not have the resources or know-how to have working relationships with lenders, and certainly do not have the capability to have such relationships with multiple lenders in order to better match consumers to financial institutions. As a result, the ability to negotiate diminishes. Smaller retailers may also not be savvy enough to be cognizant of, much less knowledgeable in, many emerging developments and/or finer points of the transaction, such as extended warranties, GAP insurance and the like. They may also be unaware or unable to exploit additional fee income opportunities, like VIN etching, credit insurance or special credit insurance.
From a lender's perspective, the system is also less than perfect. Risk management in the used car financing realm is commonly filled with defaults, slow pays and collection issues. Reaching the appropriate customers for a financial institution is a “hit or miss” strategy at best, with lenders pointlessly charging many dollars in application fees which will likely never come to fruition. A large number of applications are also never approved, which translates to wasted time and money on the processing of unqualified applicants.
Similarly, other service and product providers are often unable to tap an appreciable percentage of the market because impediments to the market exist. Cost, time and the simple knowledge of who to target leave these providers generally to deal with only a portion of the franchise retailers, who comprise less than half of the estimated overall market, leaving independents a giant untapped resource. Expanding the product base to the many retailers that may not be implementing products and services such as GAP insurance and extended warranties is thus a goal as well.
Obvious downsides to the current method of retail exist. Having to individually handle each component of these vehicle transactions, coupled with the numerous vendors of the varying services, makes the dispensation of the transaction a long and arduous task, as well as making the single act of acquiring an automobile a multi-faceted process rife with the possibility of error and inefficiency. For example, certain financial institutions only offer financing to customers of certain financial aptitude, making submission of some customers' lending requests a moot issue. Certain value-added services are only available to certain customers, and therefore should not be offered. Certain other value-added services should be offered, and oft are not, effectually missing sales. Compliance and consumer credit are required for certain portions of a transaction, and not others. All these nuances in the transaction, coupled with the relative lack of knowledge (partly as result of high turnover) in the vehicle sales representative business, make mistakes and time commitment a very relevant issue.
The consequence of these issues is delayed acquisition, loss of sales, reduced productivity, consumer dissatisfaction, increased floor plan expenses, increases in lender processing, loss of value-added product sales, possible compliance violations and other lost opportunities for consumers, financiers and retailers.
The present invention of a unified transaction is thus a much-improved mode of handling this acquisition process, primarily because it overcomes the multitude of problems recited above by unifying the transactions into a single process, decreasing complexity and costs while simultaneously increasing productivity, breadth of products and offerings available, the number of retailer and service provider relationships, volume of sales and products sold as well as consumer satisfaction. This overall transactional process can be defined as a “metamarket,” or a set of related activities that accomplish a single consumer goal. In this case, the metamarket goal is that of the acquisition of an automobile.
In addition to the inherent efficiencies of a metamarket driven by a metamediary, another benefit of the present invention is the resultant drastic reduction in risk and optimized risk management for retailers and lenders in the vehicle acquisition transaction. In the present invention, the “metamediary” (or third party that routes information to appropriate destinations to present a seamless approach to the consumer) has the option to undertake the risk associated with the transaction, such as repossession, collections, re-purchase and the like. In this way, the retailer and bank can be at least partially absolved of responsibility associated with these aspects of the lending transaction, as the metamediary may simply buy back the loan, and undertake to collect or repossess as necessary. Having a cooperative retailer repurchase the repossessed automobiles would also be an option, which could benefit both parties to such a transaction and be yet another aspect of this invention.
Risk is further mitigated by checking for retailer integrity, performing background checks, which aid in the prevention of fraud perpetuated on lenders. All parties can be checked as well, for credit background, financials and the like on all parties involved. This is imperative because the principals of the business may be “clean,” but all parties involved should be checked, such as the finance manager, credit manager and so forth. This helps to encourage lenders and other service providers to deal with the smaller retailers, since lenders are often reluctant to deal with retailers whose integrity they cannot account for. It thus becomes difficult to track down and manage bad dealers. The present system thus establishes proper dealer setup procedures, complete with risk management tools. System alerts, thresholds and notifications can be setup to help mitigate risk as well. This type of system can detect loan “hopping” whereby a customer goes from retailer to retailer in an attempt to get a loan. This type of system can detect this behavior and notify the system operator of same. Effective data management by the metamediary thus enables much better client, consumer, lender and service provider management so that the metamarket as a whole is more organic rather than the current mode of disjointed processes.
Of course, there are good reasons for lenders and service providers to be cautious, since it is not unheard of for retailers to (either intentionally or negligently) setup so-called straw purchases, wherein one party signs a loan to purchase a car for someone else; in essence, the party responsible for the loan is not the party who will be driving or housing the automobile. This type of arrangement leads to banks not being able to locate the automobile if and when a repossession is required; therefore this method helps to eliminate risks such as these, and this is but one example of the problems that can be reduced or eradicated by having the metamediary manage the metamarket.
The target of the invention is all vehicle retailers, including car, marine and RV dealers, both franchise (manufacturer-oriented) and individual (local pre-owned) retailers. Other dealers with a similar business plan could also feasibly benefit from this type of system. Individual retailers are more targeted by the present invention, since they stand to gain more from the present invention, and they generally have less infrastructure set up for the aspects of the vehicle acquisition transactions than do the franchise retailers. They also generally do not have the resources or expertise to deal with multiple banks, or other preferred sources of financing. And since there are estimated to be over twice as many individual retailers (55,000 estimated as of this writing) than franchise retailers (25,000 estimated as of this writing), the present invention stands to benefit many businesses across the country. Being able to offer the three primary services to an independent (financing, floor planning and technology) would be a great boon to the marketplace—one this invention seeks to bring about. Essentially then, the metamediary brings together a multiple-retailer, multiple-service provider, multiple lender marketplace for multiple consumers.
Other inventors have attempted to address the presented problem, such as the inventions disclosed in U.S. Pat. Nos. 5,878,403 and 6,587,841 to DeFrancesco and 6,208,979 to Sinclair. However, these references only address the issue of loan applications, and do not address the entire metamarket as does the present invention. Clearly then, the present invention offers a much more complete and efficient solution that has yet to be addressed.
All of these aspects of the current mode of vehicle retailing lead to an increased need for a revised method of vehicle acquisition with minimized cost and complexity, all of which the present invention addresses.